Telecom stocks gained significant momentum on Monday this week following Windstream Holdings, Inc. ( WIN ) announcement of its spin-off plans in order to create an independent, publicly traded real estate investment trust (REIT).
Windstream seems to be benefiting from its new strategy and recorded a rally in share price early this week. The company received a green signal from the Internal Revenue Service to spin-off select assets, which further drove the market value of the company. Interestingly, other telecom stocks also received a stir on the possibility of similar tax saving potentials through the REIT route.
However, it is still a matter of conjecture as to whether big telecom players will be able to replicate Windstream's strategy in order to avoid Federal taxes. Nevertheless, Windstream's latest announcement, timed well amid the ongoing earnings season, has taken the entire telecom industry in its grip. We believe this should continue to have a ripple effect on the telecom stocks albeit for a short term.
Most of the companies like CenturyLink, Inc. ( CTL ), Frontier Communications Corp. ( FTR ) and Verizon Communications Inc. ( VZ ) have already recorded significant gains early this week. However, there are certain companies, which in our opinion, are worth considering following the impact of Windstream's REIT Plan.
Cincinnati Bell Inc. ( CBB ): The company provides telecommunications service to businesses and consumers in the Greater Cincinnati and Dayton areas primarily on its own wireline and wireless networks. Following Windstream's declaration, the stock witnessed around 4% gain in its price on Monday and has continued to hover around the day's closing since then. Currently, Cincinnati Bell has a Zacks Rank #2 (Buy), which suggests a positive momentum ahead for the stock.
Mandalay Digital Group, Inc. ( MNDL ): The company offers mobile content solutions to wireless carriers and original equipment manufacturers. It offers software solution, for application installation, portal management, user interface, content development, and billing technology. The company boasts a Zacks Rank #2 and therefore, can be considered as a potential stock to watch out for.
Level 3 Communications, Inc. ( LVLT ): The company offers communication and information services across North America, Latin America, Europe, the Middle East, and Africa and boasts one of the largest Internet infrastructures in the world. The stock continues to trade close to its 52-week high, which definitely makes it worthy of attention.
Following Windstream's announcement, Level 3 Communications gained around 3% on Monday trading and has retained its upswing thereafter . The stock has a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportWINDSTREAM HLDG (WIN): Free Stock Analysis ReportLEVEL 3 COMM (LVLT): Free Stock Analysis ReportCENTURYLINK INC (CTL): Free Stock Analysis ReportCINCINNATI BELL (CBB): Free Stock Analysis ReportFRONTIER COMMUN (FTR): Free Stock Analysis ReportVERIZON COMM (VZ): Free Stock Analysis ReportMANDALY DIGITL (MNDL): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research